Latvian financial sector should work like a Swiss clock
Photo: Baltic-course.com
Parliamentary Secretary Ministry of Finances Edgar Putra thinks that the bank or the financial services industry Latvian should evolve in quality, rather than quantity direction, so that Latvia, like Switzerland, after some time be able to say that our banks work as precisely as a Swiss clock. Politician points to the important role of banks in economic growth, while developping loans.
«Our economy has grown in recent years. If in 2014 it was 2.4%, then 2.7% last year already, and I am convinced that this year will reach 3%,» the Latvian economic growth, estimates Putra, noting that next year’s gross domestic product growth is planned 3.3% . In his view, many countries in the European Union would be very happy if they grow as fast as Latvia now. In addition, Latvia has successfully managed to compensate for the loss of the Russian exports, strengthening the cooperation with other countries.
As for the financial services sector, the FM Parliamentary Secretary emphasizes that banks should shift from quantity to quality. «We have so far worked on the quantity, less thinking about quality. It shows with all kinds of suspicious money-related scandals, the fact that the Financial and Capital Market Commission (FCMC) imposes penalties. Banks have shown that knows how to take the money, take the money of non-residents, since it accounts for 53% of deposits in banks. That’s right, because the loans, the money is invested partly in the Latvian economy — the taxation of capital gains and other income. But this is something for us to pay as well,» said Putra, indicating that this possibility to take the money in Latvia have to pay by credit rating. «Credit rating affects our debt and impact our business, we have to pay more for servicing public debt,» says FM representative.
In his view, it would be logical that we have a strong banking sector, that it would be able to attract the money of non-residents, including from the CIS countries, but does it without breaches and with an appropriate cash flow control." underlines Putra, noting that last FCMC decision, amendments to the Credit Institutions Law, which will significantly increase the penalties for insufficient funds control, is the quality direction.
The work of newly appointed head of FCMC Peteris Putniņs, he evaluates positively. «I think that the first step is in the right direction — aimed at ensuring that it would work in quality, rather than quantity direction. This means that not only a new broom sweeps clean, but they are long-term steps to improve the quality of commercial banks,» says FM Parliamentary Secretary. In his view, it is true that the government bill should be prepared in the FCMC, as it is important that the industry itself and supervisors work towards a positive impact on the banking sector of the Latvian economy growth.
Putra positively assessed the fact that the FCMC has a special department responsible for the crime of money laundering, terrorist financing threat prevention through banks. In addition, the department sets a high professional and reputation requirements.
At the same time, he also expects the bank to play the role in lending business, especially in the economic sector "In the long term we want to grow with stable 5%. Banks are one of the factors for this growth, so there would be investments flowing and that entrepreneurs can borrow this money. We expect that the banks still actively involve in corporate lending, in order to raise GDP, export performance, "says Putra. He hopes that the banks will work towards the introduction of innovative products, while the FCMC should be prepared to improve the regulatory framework and monitoring tools to be able to fully control the new innovative banking products.
As a positive step in improving the banking sector’s Putra considers attracted US companies planned audits in Latvian commercial banks. As already reported, the US advisers attracted 14 non-resident sector employees to evaluate the performance of commercial banks, and the inspection can be concluded in late May. FCMC determined that these checks should be for those banks, of which more than 20% are non-resident deposits and which has a large share of transactions in US dollars.
While the checked banks on the list are not Nordea, whose name was voiced in connection with the so-called Panama documents and offshore company service offering, Putra does not exclude the possibility that under examination bank list can be updated and could include Nordea, if appears more and more specific information.
Asked whether pressure coming from foreign countries to closer monitore the credit institutions can not be linked to another jealousy of the Latvian’s ability to attract a large share of non-residents money, Putra indicates that we have to be able to use the ability to attract foreign funds, but do it wisely and qualitatively to not be suspected for dirty money laundering. He points out that Estonian banks in non-resident deposits make up only 11%, in Lithuania even less — 3%, while in Latvia it is more than half. Putra is convinced that improving the control mechanisms of raising funds of non-resident, in the long term Latvia will benefit. «My vision is that Latvia, like Switzerland could say that the bank is working with the same accuracy as a Swiss clock. I assume that we are on the move,» summed up the FM Parliamentary Secretary.
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